Colleges need to demonstrate the value of their product with hard numbers, an increasingly popular maxim holds, or lawmakers will try to do it for them.

That prediction is now truer than ever, as the nation’s highest elected official has joined state policymakers in pushing performance-based funding for higher education. The sweeping[1], ambitious proposal[2] President Obama unveiled Thursday seeks to tie all federal financial aid programs to a rating system of colleges on affordability, student completion rates and the earnings of graduates.

The U.S. Department of Education will hold public hearings to develop the ratings before fall 2015. Then the White House will go to Congress to pursue legislation that would link aid levels to colleges’ performance. For example, students who attend standout institutions could receive bigger Pell Grants and more affordable student loans.

President Obama said he wants the new strings attached to federal money by 2018.

“We are going to deliver on a promise we made last year, which is colleges that keep their tuition down and are providing high-quality education are the ones that are going to see their taxpayer funding go up,” Obama told students[3] at the State University of New York at Buffalo. “It is time to stop subsidizing schools that are not producing good results, and reward schools that deliver for American students and our future.”

More on the Obama Plan

Disappointed, Not Surprised:[4] Professors overwhelmingly voted for Obama twice. But five years into his presidency, few faculty leaders are surprised that they disagree strongly with his plan for higher ed reform.

Enjoying White House Attention[5]: For colleges and other organizations promoting alternative paths to degrees, the president's speech was validation they have wanted.

Ratings Are Not So Easy:[6] It's hard to argue with President Obama's analysis of higher education's problems, writes Karen Gross, but his solution -- a system for rating colleges -- must be crafted very carefully.

Pulling it off won’t be easy. The creation of metrics will be enormously complicated as well as controversial. A key Republican leader in Congress on Thursday said[8] he worried that the ratings would be arbitrary and could lead to “federal price controls.”

Yet few could argue that Obama failed to live up to his promise[9] of going big in trying to make college more affordable, which is a popular issue on both sides of the political aisle. And the administration can tackle much of the ratings system without needing to seek Congressional approval.

Many observers said the president’s plan -- which seeks to fold all sectors of higher education into the same sort of regulatory regime the White House has pushed with for-profit colleges and vocational programs at community colleges – will have a big rhetorical impact on the debate over accountability in higher education. It could also substantially increase the federal government’s presence in overseeing how colleges do business.

“I don’t have much confidence in the Department of Education doing a subtle job,” said Richard Ekman, president of the Council of Independent Colleges, an organization of mostly small private colleges.

However, Ekman and other officials who work at One Dupont, which is the Washington headquarters of many higher education lobbyists, said they would work with the White House to try to craft fair, meaningful standards. “A lot of the goals are ones that we support,” said Ekman.

Private colleges so far have been lukewarm at best about publishing the data in the federal government's College Scorecard[10], which the administration recently created, let alone basing aid funding on accountability measures.

If college presidents came out swinging against Obama's plan, they were hard to find. But several said they support it. For example, Nancy Zimpher, chancellor of the SUNY system, said SUNY shares the president's priorities. "The key to success for the president's plan will be working with states to ensure that the right data and metrics are used to measure outcomes," Zimpher said in a written statement[11].

Train is Rolling

White House officials stressed they would consult with colleges throughout the process, although the higher education lobby was apparently not involved in crafting the plan. And Obama spread the blame for increasing tuition rates beyond the academy during his speech, calling out states for defunding public colleges.

The president’s inclusion of hard deadlines in his plan has already “caused people to take it seriously,” said Bob Shireman, a former Education Department official who now leads California Competes, a nonprofit group with a focus on higher education.

Shireman, who battled for-profits by leading the administration’s push for gainful employment regulations, said the White House is clearly moving forward with its performance-based metrics crusade, whether college leaders like it or not. So he said the tendency to “hope they go away” won’t work this time.

Terry W. Hartle agreed. Hartle is senior vice president for government and public affairs at the American Council on Education, which is higher education’s umbrella trade group. He said the council hopes to assist the Education Department as it develops college ratings.

“We should assume that they are simply going to go forward and do it,” he said.

Shireman said the administration appears sincere about wanting higher education’s input. The debate over a ratings system could be an opportunity “to make it something useful,” he said.

The measures will be designed to break higher education into its many differing segments, the White House said. That means community colleges won’t be measured against Ivy League institutions. “These ratings will compare colleges with similar missions,” according to a fact sheet[2] the administration released, and “identify colleges that do the most to help students from disadvantaged backgrounds as well as colleges that are improving their performance.”

The council called the president’s plan both thoughtful and multifaceted.

“The administration has certainly published an impressive menu of ways to reshape higher education,” said Hartle. “The hard work starts now.”

However, the council will not help the administration in its effort to tie a rating system to federal aid -- a move that would require Congressional legislation. The group said in a written statement[12] that it would oppose that piece of the plan, which “could have a profoundly negative impact on the very students and families the administration is trying to help.”

All Ears at 1600 Pennsylvania Ave.

The White House managed to keep the plan largely under wraps before its release. And several higher education officials said they were surprised by the comprehensiveness of the proposals, which also included a push for emerging delivery forms of higher education, such as competency-based programs. (See related article here[5].)

Administration officials said the plan was still a work in progress on the night before Obama’s speech, sources said. And the fact that the complex proposals might not be fully baked could be a good thing, at least for college leaders. That’s because they may have a chance to influence the plan as it takes shape.

This White House tends to hold more closed-door meetings on higher education than previous administrations, some observers said. This time around, however, administration officials sounded sincere about allowing representatives from all sectors to get their say.

James Kvaal, deputy director of Obama's domestic policy council, said in a call with reporters that the department would be speaking to “anyone with a good idea about how to develop these ratings.”

One lingering question, observers said, was who at the department would lead the discussion. The agency is shorthanded[13] after the departure of several top officials. And Duncan tends to focus on K-12 issues.

For-profit college leaders, who often complain about being left out regulatory discussions, said they were eager to participate[14] in the process. And some said they were optimistic that the online, flexible degree programs that many for-profits offer could help them, given the administration’s interest in potentially “disruptive” technology.

The industry generally supports devising measures of student outcomes, said Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities, for-profits’ primary trade group. And he applauded the president’s call to create ratings that take into account the different student populations that colleges serve.

“I don’t think any sector gets hurt by this,” he said.

Even more importantly, for-profits are glad that the proposed system will apply to all of higher education, which was a plea they made throughout the bruising battle in the president's last term over "gainful employment."

“This is where we wanted to go for a long time,” said Gunderson.

Devil in the Details

Institutionwide rating systems are controversial, in part because of the varying roles a single college can play. For example, a graduate program in nursing at a university is a far different animal than the undergraduate track for English majors.

As a result, it will be hard for the administration to create meaningful metrics, said John Thelin, a professor of education at the University of Kentucky, who recently wrote a book about college costs[15]. “What is the standard student experience at Ohio State?” said Thelin, who compared that question to “asking what it’s like to live in New York.”

Gainful employment regulations looked at academic program-level data rather than the performance of institutions. (The regulations are currently stalled. The Education Department will take them up again[16] next month.)

Earnings data at the institutionwide level are seriously flawed, said Anthony P. Carnevale, the director of Georgetown University’s Center on Education and the Workforce. They tend to favor more elite institutions, which send fewer graduates into lower-income fields, such as counseling or teaching.

However, the White House pledged to find a way to compare similar institutions. If possible, that could reduce some worries about the ratings.

Higher education experts said another concern about the metrics would be for the large number of lower-income and adult students who are interested only in attending one local institution. The nearest community college is often the only option for students, although online programs are becoming more viable.

Brian Kelly, editor of U.S. News and World Report, said he welcomes more information about the performance of colleges. But he predicted that the White House ratings would be used differently than his publication's popular rankings.

Given the open-access mission of community colleges, many of their leaders will be wary of Obama’s proposed rating system, said David Baime, the American Association of Community Colleges’ senior vice president of government relations and research.

“Our institutions don’t like to be rated or ranked,” he said. “It’s antithetical to their nature.”

A worse-case scenario would be if students at a community college that got dinged in the rating system were unable to receive the full Pell Grant amount. Even a few hundred dollars could keep them from attending college at all, experts said.

“To limit student choice would be very unpopular,” said Thelin.

However, Shireman said the federal government already prevents students from using aid money at certain institutions. The feds do not allow aid dollars to flow to colleges with high loan default rates, for example. He said that precedent could and should be expanded under the president’s proposal.

“We use metrics now to restrict peoples’ choice,” Shireman said. The key question, he said, is “what are we willing to subsidize?”